Quicksilver buy gives Woosh a land base

Woosh's Chief Executive Bob Smith said the buy had given the company the ability to maximise capital return. Picture / Richard Robinson

Woosh Wireless is getting wired. The Wi-Max, high-speed internet company - which abandoned listing plans this year - has purchased smaller fixed-line net provider Quicksilver for an undisclosed sum.

The buy, announced yesterday, has increased Woosh's share of the total internet and tolls market to 10 per cent - from 25,000 to 35,000 customers.

Woosh is keen to bolster its ailing wireless business by seeking new acquisitions in the competitive post-unbundling environment.

The company has accumulated losses of more than $70 million.

Woosh built up a customer base of 20,000 on its wireless broadband network - that avoided the need to use Telecom's fixed-line network. But the Government's decision to regulate the telecommunications market has opened the way for other providers using Telecom's network to offer a faster, cheaper alternative to Woosh.

The purchase of Quicksilver would enable it to take advantage of new services as the regulatory environment opens up, including voice over internet protocol and naked DSL.

"The regulatory regime has changed and has provided an opportunity for Woosh to capitalise on that and now we have the ability to maximise the capital return with the different infrastructure," said chief executive Bob Smith.

Quicksilver offered ADSL - digital subscriber line - broadband for home and business using Telecom's fixed line network.

"Quicksilver is an excellent strategic fit giving Woosh an extra dimension bundling wireless and fixed-line services ... and will almost certainly accelerate its market share growth," Smith said.

Woosh would still maintain and grow its wireless services and was acquiring new cell sites to expand the network in Auckland, Wellington, Christchurch and Hamilton.

IDC telecommunications analyst Chris Loh said the purchase made sense for Woosh because it would increase profitability for the business.

Woosh would be able to develop its voice-over services to counter the lower margins on broadband using Quicksilver's ADSL broadband network.

"Margins on broadband are very tight and players are having to negotiate the shift from dial-up to broadband, which has lower margins, and many are looking at their business models and how to service and how to do it well," said Loh.

Telecommunications Users Association of New Zealand chief executive Ernie Newman said it was delighted that new investment was occurring thanks to the Government's new policy settings.

"I think it is a sensible divergence of their business. They have taken a while to get to where they are on the wireless front but this way it lets them be a more comprehensive, robust company," he said.

Orcon chief executive Scott Bartlett said it was clear evidence that a new round of industry consolidation was occurring; with many players in the market reconsidering their strategic position after the announcement of new regulatory measures.

Getting wired

* Woosh Wireless has bought internet provider Quicksilver for an undisclosed sum.

* Quicksilver began in 1999, has 10,000 customers and offers fixed-line broadband services.

* Woosh uses a wireless broadband standard called WIMAX.